Can This Drug Be a Game Changer for Eli Lilly?

Many large pharmas in the midst of the so-called "patent cliff" have chosen to turn to their development pipelines for new drugs, instead of playing the merger and acquisition game. This isn't entirely surprising given that valuations for many clinical stage biotechs have absolutely soared over the past few years, lessening their value proposition to potential acquirers. Eli Lilly & Co. (NYSE: LLY) is one of the top names facing this dilemma these days, as its top-selling drug Cymbalta has lost patent protection and Teva Pharmaceuticals launched a generic version of Evista last March. Yet, the company's pipeline has struggled to replace these top-selling drugs, with some of its most promising experimental drugs failing to meet their primary endpoints in late-stage trials over the past few years.

Eli Lilly is thus hoping to change its fortunes with an experimental breast cancer drug known as bemaciclib. The company reported results from the drug's early stage trial last week at the American Association for Cancer Research Annual Meeting in San Diego, generating significant buzz in the process.

What perked up investors' collective attention was that patients on the drug showed a progression-free survival of around 9.1 months and 25% of patients in the trial saw their tumors shrink. What's noteworthy about these results is that the patient population in the trial had advanced disease and had stopped responding to a cavalcade of other therapies. Based on these promising early stage results, Eli Lilly has decided to advance the drug into a pivotal registration trial. Given the increasing importance of bemaciclib within Eli Lilly's pipeline, I think it's important to take a closer look at the drug's prospects for becoming the game changer the company needs moving forward.

Serving a large underserved marketBemaciclib is targeting patients with advanced-stage, estrogen-receptor-positive breast cancer. What you need to understand is that this population makes up somewhere around 75% of the entire breast cancer market. Moreover, there are few pharmaceutical options for patients who have stopped responding to standard therapy, with many patients choosing to enroll in an ongoing clinical trial. As a result, analysts have suggested that the market size for this unmet medical need could be as high as $10 billion per year. What you should keep in mind is that Roche's (NASDAQOTH: RHHBY) wonder drug Herceptin has achieved megablockbuster status as a treatment for a much smaller cadre of breast cancer patients, namely HER2-positive patients. In short, Eli Lilly's experimental drug would probably be a blockbuster if approved.

How bemaciclib fights cancerOK, so what does that mean? Let's take a brief walk through the science behind bemaciclib in order to understand the drug's unique approach to fighting cancer. The progression from the first cell cycle checkpoint (G1) to the DNA synthesis phase is regulated in many ways by cyclin-dependent kinases (CDKs), in particular CDK 4 and 6. What's key to understand is that many types of human cancers involve problems occurring at the transition from the first cell cycle checkpoint to the synthesis phase. By inhibiting the expression of CDKs that activate this pathway, the idea is to arrest the cell cycle, forcing it to eventually commit suicide (quite literally). Normally, cells that have problematic mutations undergo what's called "apoptosis" or programmed cell death, if G1 is delayed. Cancer cells, by contrast, proceed into the DNA synthesis phase, leading to uncontrolled proliferation and tumor formation. While we've known about this general process for decades and have been attempting to use it as a therapeutic target, our knowledge has only now progressed to the point where a drug based on this approach is feasible. Indeed, Pfizer (NYSE: PFE) and Novartis (NYSE: NVS) also have CDK 4/6 dual inhibitors indicated for advanced-stage breast cancer under development, showing the rapid growth of the field.

Foolish wrap-upWhile these early stage results are promising, we will need to wait until 2015 to 2016 for the next trial to conclude that will determine the drug's ultimate fate. By then, Pfizer could already have its competing drug Palbociclib on the market and Novartis has now advanced its drug into a late-stage trial as well. While Novartis has largely kept quiet about the progress of its drug until now, Pfizer's Palbociclib was reported to roughly double progression-free survival in its mid-stage trial, although the drug has yet to show a clinical benefit in terms of overall survival. Even so, you need to bear in mind that this is a vastly under-served market that should be able to support multiple drugs. Consequently, I believe that bemaciclib should be able to find a profitable niche, even if Pfizer and Novartis get their drugs approved first. So, this is definitely a drug in Eli Lilly's pipeline to keep close tabs on moving forward.

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